The Hartford Financial Services Group Inc. has become the first of the nation’s 20 largest life insurance companies to offer disability coverage as an option on most of its permanent life insurance policies, according to the company.
The insurer points to market conditions in which a disabled employee is also the owner of a small business or a key employee suffers a sudden disability, which can impact the financial well-being of the company and its staff. The death benefit can be used to replace income, pay estate taxes and help fund business continuation. But the disability of an owner or key employee can be just as disruptive.
The Hartford’s new DisabilityAccess Rider is designed to provide small business owners and their key employees with help with critical expenses while those covered by certain Hartford life insurance policies recover from a disability or, in the case of a life-altering illness or injury, find a new way to make a living.
Once qualified under the rider, the policyowner receives a monthly disability benefit of as much as $5,000 a month for up to two full years. The rider can be purchased with many new permanent insurance policies at an additional cost of between 6% to 10% of the premium.
When purchasing one of The Hartford’s Bicentennial UL Founders, Leaders VUL Liberty, or Leaders VUL Legacy life insurance policies, a policyholder may purchase a DisabilityAccess Rider for an additional charge and a first-year issue fee. For variable universal life insurance, consumers should carefully consider the investment objectives, risks, charges, and expenses of the product and its underlying funds before investing.
The rider provides a monthly benefit with a maximum lifetime benefit equal to 24 monthly payments, and can help bridge the gap between a return to work or, in the case of a permanent disability, the potential receipt of Social Security benefits. Because the DisabilityAccess Rider is on an individually owned life insurance policy, coverage is not lost if an employee changes jobs. It can be renewed up to the policy anniversary date closest to the insured’s 65th birthday, though the cost of the coverage may increase.
The monthly benefit amount is determined when the policy is issued and is generally received income-tax free. The maximum monthly benefit is the smallest of the following: 2% of the total initial face amount of the policy, $5,000, or 30% of the monthly salary at the time the policy is issued.
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